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MEMBER DIARY

How Your State Can Free Itself of Obamacare

Can a single state alone free itself of ObamaCare? Answer: Maybe. First some important facts:

1) Anyone who is on a State’s Medicaid plan does not have to pay the ObamaCare Penalty
2) Medicaid does not have to meet the minimum essential benefits requirement of ObamaCare
3) States can expand Medicaid and set eligibility requirements.

Here is what a state could do:

1) Anyone (regardless of how high their income) who purchases a performance bond guaranteeing the bond company will reimburse the state for any Medicaid services provided will be offered Medicaid.

The first provision would ensure it would cost the state nothing to expand coverage and it would eliminate the ObamaCare penalty because they have Medicaid. The second provision would allow a bond company, for extra cost, to provide people treatment from any doctor (not just those who accept Medicaid)

What would be the benefits of this approach?

First, the ObamaCare, the penalty which will increase to 2.5% of income next year, is avoided. Second, performance bonds can be structured with any type of provision to customize coverage as desired. For example, suppose a 47 year old woman who has had her tubes tied wishes to obtain insurance coverage. Under ObamaCare, she is required to pay for maternity coverage (yes, crazy) The bond company recognizing it would be extremely unlikely this woman would claim maternity care, could offer her a premium based upon what she was likely to use–not the things Obama thinks she should have.

Bond companies could adjust premiums or require security deposits to customize the plan to meet people’s desired coverage. For example, suppose a perfectly healthy 39 year old man decides he only wants to have a catastrophic plan that would cover extreme medical expenses. This coverage is not allowed under ObamaCare. Since the man is technically covered by Medicaid, he could decide to break the deal and seek non-catastrophic care through Medicaid, however, the bond company could simply require a security deposit to cover such claims—refundable if he made no such claims. The bond company could therefore offer what amounts to a catastrophic plan. Should a catastrophic event occur, the bond company, the man could seek treatment through Medicaid or the contract could be written so the bond company paid his choice of doctor/hospital. If the man did not have the funds needed to make the security deposit, he could pledge some other asset.

This approach would effectively eliminate the minimum required coverage of ObamaCare and prevent the cost-shifting of premiums. The rates would be much lower and no one would have to pay the ObamaCare fine.